Oil futures end above $93, gain for the week

Small gain on day after oil supply report, Fed minutes, jobs data

V.Phani Kumar

SAN FRANCISCO (MarketWatch) — Oil futures finished with a slight gain Friday, finding support from a hefty drop in last week’s U.S. crude supplies, but also pressured by a stronger dollar, as traders weighed concern over a potential end to the Federal Reserve’s monetary stimulus this year.

Crude-oil futures for delivery in February
US:CLG3
tacked on 17 cents, or 0.2%, to settle at $93.09 a barrel on the New York Mercantile Exchange. Prices, which traded between $91.52 and $93.15, climbed 2.5% for the holiday-shortened week.

“Crude has mustered a minor gain as the nonfarm payroll report helped to pare strength seen in the U.S. dollar,” said Matt Smith, commodity analyst at Schneider Electric in Louisville, Ky. And “a huge draw in the oil inventory report — although due to end-of-year tax considerations — helped to bring oil prices back into minorly positive territory.”

Motor gasoline supplies rose by 2.6 million barrels, while distillate stocks climbed 4.6 million barrels. Analysts had forecast a rise of 2.3 million barrels for gasoline inventories and a climb of 1.6 million barrels in distillate supplies, which include heating oil.

February gasoline futures
US:RBG3
lost 3 cents, or 1.2%, to end at $2.76 a gallon, up 0.2% from a week ago. Heating oil
US:HOG3
for delivery in the same month weakened by less than a penny, or 0.2%, to $3.02 per gallon, down 0.1% for the week.

“Imports fell to the lowest level since September 2008 (and Hurricane Ike),” said Smith.

But that was “due to end of year tax considerations,” he said, explaining that Gulf Coast refiners get taxed on how much oil they have in storage at year-end, so they may try to mitigate that cost by delaying receipt of imports. Given that, Smith said the market will likely see a significant rebound in supplies next week.

John Macaluso, research analyst at Tyche Capital Advisors, said that “the issues with the elevation of the [U.S.] debt ceiling and the sequester still ahead of us should help keep crude down as we come into the first quarter of the new year.”

Fed minutes and the dollar

Oil prices lost 20 cents Thursday after the minutes of the Fed’s most recent meeting were released.

Reuters

Federal Reserve Chairman Ben Bernanke.

The minutes showed “several” Fed officials thought the central bank would be able to slow, or stop altogether, their asset purchases well before the end of the calendar year. See: Fed sees bond buying ending this year.

The Fed’s asset purchases, known more popularly as quantitative easing, are regarded as a key source of liquidity that weakens the dollar and helps support an array of assets, including crude oil.

Meanwhile, the market saw lackluster data Friday, helping the dollar to pare some of its strength, with the U.S. creating 155,000 jobs in December versus expectations for a gain of about 160,000 jobs. The unemployment rate was unchanged at 7.8%. See: U.S. gains 155,000 jobs in December.

Rounding out action in the energy market, front-month February natural-gas futures rose 9 cents, or 2.8%, to $3.29 per million British thermal units, while prices for the March contract
US:NGH13
rose 9 cents, or 2.8%, to $3.30. But the contracts were both down over 5% for the week.

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